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PAE Ltd.

BSE: 517230 Sector: Auto
NSE: PAEL ISIN Code: INE766A01018
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VOLUME 540
52-Week high 15.33
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Mkt Cap.(Rs cr) 7
Buy Price 0.00
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OPEN 6.45
CLOSE 6.40
VOLUME 540
52-Week high 15.33
52-Week low 1.88
P/E
Mkt Cap.(Rs cr) 7
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

PAE Ltd. (PAEL) - Auditors Report

Company auditors report

To The Members of PAE Limited

Report on the Standalone Financial Statements

Qualified Opinion

We have audited the standalone financial statements of PAE Limited ("theCompany") which comprise the Balance Sheet as at March 31 2020 the Statement ofProfit and Loss (including Other Comprehensive Income) the Statement of Changes in Equityand the Statement of Cash Flows for the year ended on that date and notes to thefinancial statements including a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the standalone financialstatements").

In our opinion and to the best of our information and according to the explanationsgiven to us except as stated in the Basis of Qualified opinion paragraph belowthe aforesaid standalone financial statements give the information required by the Act inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2020 its loss changes in equity and its cash flows for the year ended onthat date.

Basis for Qualified Opinion

1) We draw your attention to the fact that the Net Worth of the company has beensubstantially eroded as at the year ended 31st March 2020. Further thecompany has incurred a further loss of Rs. 102.53 Lakhs (excluding other comprehensiveincome) for the year ended 31st March 2020. Further the liabilities of theCompany far exceed the realizable value of assets owned by the company. In addition thecompany has significant litigations under various taxation & other laws the outcome& impact of which is unascertainable. These conditions state that a materialuncertainty exists that may cast significant doubt on the entity's ability to continue asa going concern. Despite these circumstances for the reasons mentioned in Note No. 36 ofNotes to financial statements these financial statements have been prepared on a goingconcern basis.

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's responsibilities for the Audit of theStandalone Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Companies Act 2013 and theRules thereunder and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our qualified opinion.

Key Audit matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

The matters described under the Basis for Qualified Opinion section were determined tobe key audit matters to be communicated in our audit report.

Emphasis of Matter

a) We draw your attention to the fact that the company has total unclaimed maturedfixed deposits of Rs. 4.25 lacs as at the year ended 31st March 2020. Howeveragainst the total amount of unclaimed matured deposits a sum of Rs. 2.60 lacs has beenmaintained in liquid funds. Therefore the company has not funded the said amount incompliance with the provisions for Section 74 of the Companies Act 2013.

b) The Company's policy for Internal Financial Controls over Financial Reportingrequires to be strengthened for adequate effectiveness to determine the risk assessments& to detect fraud if any. We are unable to comment on Internal Financial Control overFinancial Reporting in respect of statutory compliances as the company doesn't have aninternal audit control system.

Other Information

The Company's management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the information included in theCompany's Annual Report but does not include the standalone financial statements and ourauditor's report thereon. Our opinion on the standalone financial statements does notcover the other information and we do not express any form of assurance conclusionthereon. In connection with our audit of the standalone financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information; we are required to report that fact. Wehave nothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. The Board of Directors isresponsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report.

However future events or conditions may cause the Company to cease to continue as agoing concern. Refer Note No. (1) Of our basis for qualified opinion.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the standalone financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

2. As required by Section 143(3) of the Act we report that :

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany in so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of account.

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standard specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct.

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".

g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements. Refer Note no. 35 of other notes.

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts not applicable.

iii. There has been delay in transferring amounts in respect of interest and maturedunclaimed principal amount required to be transferred to the Investor Education andProtection Fund by the Company. Refer note no. 18 of financial statement

3. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act :

In our opinion and according to the information and explanations given to us theCompany has provided for remuneration payable to its directors during the current year.However the same has not yet been paid. Further the remuneration provided is not inexcess of the limit laid down under the Act.

For Jayesh Dadia & Associates LLP
Chartered Accountants
Firm's Registration No. 121142W / W100122
Jayesh Dadia
Partner
Membership No. 033973
Place of Signature:
Mumbai
Date: 30th July 2020
UDIN: 20033973AAAAAR3634

Annexure A to the Auditors' Report

The Annexure referred to in the Independent Auditors' Report to the members of theCompany on the Standalone financial statements for the year ended 31st March2020 we report that:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) A substantial portion of these fixed assets have been physically verified by themanagement at reasonable intervals and no material discrepancies were noticed on suchverification.

(c) As informed to us the title deeds of immovable properties of the Company are notavailable on record as the same are mortgaged with banks. However confirmation forholding of title deeds from the bank was not made available to us.

(ii) According to the information & explanation provided to us and based on ourexamination of the books & records of the company the Company did not hold anyinventory as at the year end. Therefore comment under this clause has not been given.

(iii) As per the information & explanations given to us and based on ourexamination of the books of accounts during the year under audit the Company has notgranted any loans secured or unsecured to companies firms Limited Liabilitypartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Therefore comments under clause (a) (b) & (c) are not given.

(iv) In our opinion & according to the information and explanations given to usthe Company has complied with the provisions of section 185 and 186 of the Companies Act2013 in respect of loans given & investments made. The Company has not provided anyguarantees / security.

(v) In our opinion and according to the information & explanation given to us theCompany has not accepted any deposits during the year from the public in terms of Section73 of the Companies Act 2013.

However the Company had accepted deposits prior to the commencement of Companies Act2013. In terms of section 74(1)(b) of the Companies Act 2013 an amount of Rs. 4.25 lacsis matured but unclaimed as at the year end. The company has shortage of liquid assetsrequired to be maintained amounting to Rs. 1.65 lacs in respect of principal amount of theunclaimed mature deposits and Rs. 0.08 lac in respect of unpaid interest on the matureddeposits which is subject to reconciliation. Company has not transferred unclaimed matureddeposit amounting to Rs. 0.50 Lac & interest on unclaimed deposits amounting to Rs.0.01 Lac to investor education and protection fund which were due for transfer as on31.03.2020. Further there are certain dealer deposits outstanding at the year-endamounting to Rs. 27.17 Lacs inclusive of interest.

(vi) According to the information & explanation provided to us the CentralGovernment has not prescribed the maintenance of cost records under sub-section (1) ofsection 148 of the Companies Act 2013.

(vii) (a) According to the information & explanations provided to us & on thebasis of our examination of the books of accounts & other relevant records theCompany is not regular in depositing undisputed statutory dues including provident fundemployees' state insurance income tax sales-tax service tax duty of customs duty ofexcise value added tax cess and any other statutory dues to the appropriate authorities.The extent of arrears of statutory dues which have remained outstanding as at the last dayof the financial year under audit for a period of more than six months is given in thetable below.

Amount Rs.
Nature of Dues (excluding interest)
Labour welfare funds 443
Entry Tax 61425
Central Sales Tax 27701
Value Added Tax 989559
Superannuation Payable 870625
Tax Deducted at Source 2146344
Provident Fund 1351925
Staff/Employer ESIC 446164
Profession Tax 191815
Staff Insurance 12771
Total 6098771

(b) According to the information and explanations given to us details of disputedstatutory dues which have not been deposited or partially deposited are as follows:

Name of the Statute Nature of Dues Period to which amount relates Amount (Rs. in lacs) Forum where dispute is pending
Central Sales Tax and VAT Act VAT CST penalty and interest 1992-93 3.05 Appellate Tribunal
Central Sales Tax and VAT Act VAT CST penalty and interest 1996-97 2001-02 till 2015-16 601.60 West Bengal Sales Tax
VAT Act VAT penalty and interest 2005-06 107.99 Asst. Commissioner
Various State VAT Act VAT penalty and interest 2006-07 3.80 Revisional Tax board / Asst. Commissioner Asst. Commissioner /Rev. Tax Board/
Various State VAT Act VAT penalty and interest 2007-08 35.72 commercial tax office/ Appellate Asst. Commissioner
Various State VAT Act VAT penalty and interest 2008-09 17.27 Asst. / Deputy Commissioner / Appellate Tribunal
Central Sales Tax & Various State VAT Act VAT CST penalty and interest 2009-10 36.93 Asst./Dy/ Commissioner / Appellate Tribunal
Central Sales Tax & Various State VAT Act VAT CST penalty and interest 2010-11 153.78 Appellate Asst Commissioner/Commerci al Taxes Dept.
Central Sales Tax & Various State VAT Act VAT CST penalty and interest 2011-12 55.37 Asst. Commissioner/Appellate Tribunal/Deputy Commissioner
Central Sales Tax & Various State VAT Act VAT CST penalty and interest 2012-13 367.32 Commissioner of sales Tax/ Asst. Commissioner/ Commercial Taxes/Appellate
Central Sales Tax & Various State VAT Act VAT CST penalty and interest 2013-14 37.02 Dept/Deputy Commissioner. Commissioner of Sales tax/Asst. Commissioner/ Deputy Commissioner/Joint Commissioner
Central Sales Tax & Various State VAT Act VAT CST penalty and interest 2014-15 370.83 Asst. Commissioner/ DC Sales Tax Officer/Appellate Asst Commissioner
Various State VAT Act VAT Penalty and Interest 2015-16 26.97 Commissioner of Sales Tax/DC Commercial Tax/The Asst Commissioner
Total 1818.29

Above mentioned amounts are net of demand paid which are subject to reconciliation withvarious branches. Amounts are as certified by the management.

(viii) In our opinion and according to the information & explanation given to us& based on our examination of the records of the Company the company has defaulted inrepayment of loans or borrowings to banks. Details of defaults are as follows:

Name of the Lender Amount of default as at the Balance sheet date Period of default Remarks
Corporation Bank Principal amount Rs 448 Lacs 0 to 54 months During the year the Company has received an One Time Settlement (OTS) offer from

Corporation Bank on 31/03/2020 for the amount of Rs. 448 lacs

(ix) According to the information & explanation given to us and based on ourexamination of the records of the company the Company has not raised any money by way ofinitial public offer or further public offer including debt instruments during the year.

(x) To the best of our knowledge and belief and according to the information andexplanations given to us no material fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid / provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information & explanations given to usthe Company is not a Nidhi Company and therefore the compliance requirements relevant to aNidhi Company are not applicable.

(xiii) In our opinion and according to the information & explanations given to usand based on our examination of the records of the Company all transactions with relatedparties are in compliance with section 177 and 188 of the Companies Act 2013 whereapplicable and the details have been disclosed in the Standalone Ind AS financialstatements etc. as required by the applicable accounting standards.

(xiv) In our opinion and according to the information & explanation given to us andbased on our examination of the records of the Company no preferential allotment orprivate placement of shares or fully or partly convertible debentures has been made by theCompany during the year under review.

(xv) According to the information & explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with him/her as specified under theprovisions of section 192 of the Companies Act 2013.

(xvi) The Company is not required to be registered under section 45-1(A) of the ReserveBank of India Act 1934 and therefore the provisions of paragraph 3(xvi) of the Order isnot applicable.

For Jayesh Dadia & Associates LLP
Chartered Accountants
Firm's Registration No. 121142W / W100122
Jayesh Dadia
Partner
Membership No. 033973
Place of Signature:
Mumbai
Date: 30th July 2020
UDIN: 20033973AAAAAR3634

Annexure - B to the Independent Auditor's Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act") referred to in paragraph 2 (f) onReport on Other Legal and Regulatory Requirements of our report.

Disclaimer of Opinion

We have audited the internal financial controls over financial reporting with referenceto the standalone financial statement of PAE Limited (‘the Company') as of 31stMarch 2020 in conjunction with our audit of the standalone Ind AS financial statements ofthe company for the year ended on the date.

According to the information and explanation given to us the Company has notestablished its internal financial controls over financial reporting on criteria based onor considering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over Financial Reporting issued by the Institute ofChartered Accountants of India. Because of this reason we are unable to obtain sufficientappropriate audit evidence to provide a basis for my / our opinion whether the Company hadadequate internal financial controls over financial reporting and whether such internalfinancial controls were operating effectively as at 31st March 2020.

Management's responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (‘ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls the were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to the company's policies the safeguardingof its assets the prevention and detection of Frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the companies Act 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI And deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects. Our audit involves performing procedures to obtainaudit evidence about the adequacy of the internal financial control system over financialreporting and there operating effectiveness. Our audit of internal financial controls overfinancial reporting included obtaining an understanding of internal financial control overfinancial reporting assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditors' judgment including theassessment of the risks of material misstatement of the financial statement whether dueto fraud or errors.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the the Company's internal financial controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purpose in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable details accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statement inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorizations of themanagement and directors of the company and; (3) provide reasonable assurances regardingprevention or timely detection of unauthorized acquisition use or disposition of theCompany's assets that could have a material effect on the financial statement.

Inherent Limitations of Internal financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper Management override ofcontrols material misstatement due to error or fraud may occur and not be detected. AlsoProjections of any evaluation of the internal financial controls over financial reportingto future period are subject to the risk that the internal financial controls overfinancial reporting may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

For Jayesh Dadia & Associates LLP
Chartered Accountants
Firm's Registration No. 121142W / W100122
Jayesh Dadia
Partner
Membership No. 033973
Place of Signature: Mumbai
Date: 30th July 2020
UDIN: 20033973AAAAAR3634

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